If you’ve seen the news from IRD recently, they’ve been focussing on and highlighting issues with compliance around the bright-line.
If you aren’t sure what the bright-line is, check out our “Everything property investors need to know about the bright-line” article here.
In their recent press-release, IRD have provided some metrics as to the scale of potential non-compliance. With as many as 67% of people incorrectly reporting their income in some way, knowingly or in most cases not.
IRD have acknowledged that a large propotion of the potential non-compliance is simply due to confusion around submitting returns and how to record bright-line income.
IRD have reported that they will improve their processes around bright-line by
- Informing people of their obligations with our materials and advertising
- Getting in touch with people when they sell properties that appear to be subject to the bright-line tests
- Making the process easier – for example creating a box for property related income on tax returns
- Improving the targeting of our investigations through continually refining our data analysis
- Pursuing through audits and prosecutions those who refuse to meet their obligations.
They have also suggested that they will be placing additional emphasis on investigating compliance in this area and that they have a full picture of house sales to work with.
We think this is all the more reason why you should seek advice from an accountant (like us) before you even think about purchasing a property to ensure you have the right structure to support your long term plans.
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